Ethereum's 60,000 ETH Outflow Sparks Price Recovery Hopes

Ethereum (ETH) has experienced a significant outflow of over 60,000 ETH, suggesting a potential shift in investor sentiment and a possible sustained price recovery. This development comes amidst a series of headwinds that the leading altcoin has faced in recent days, including heightened market volatility and substantial liquidations.

Despite the recent price decline, Ethereum's Chaikin Money Flow (CMF) has maintained an upward trend, forming a bullish divergence. At the time of writing, ETH's CMF rests above the zero line at 0.14. This indicator measures the strength of buying and selling pressure by analyzing price and volume over a specific period. When CMF rises while an asset's price declines, it indicates that buying pressure is increasing despite the downtrend. This divergence suggests that ETH traders are accumulating the asset at lower prices, potentially signaling a reversal. A sustained increase in the ETH's CMF hints at a price rebound as demand outweighs selling pressure.

Moreover, after several days of negative values, ETH's funding rate has turned positive again. The shift in market sentiment suggests that futures traders are increasingly favoring long positions, indicating renewed confidence in ETH's price recovery. At the time of writing, this stands at 0.0046%. The funding rate is a periodic fee exchanged between long and short traders in perpetual futures contracts. It ensures that the contract price stays close to the spot price. When the funding rate is positive, it means that long traders are paying short traders, indicating stronger demand for long positions and a bullish market sentiment.

Ethereum's price decline has caused it to trade within a descending channel over the past few weeks. This pattern is formed when an asset's price moves within a downward-sloping range, creating lower highs and lower lows over time. It typically signals a bearish trend, but a breakout above the channel could indicate a potential reversal. If the demand for ETH soars, a potential breakout could propel the coin's price to $3,249. On the other hand, a failed breakout attempt could cause a price decline toward the channel's support at $2,553.